You Will Lose Money In An MLM

Why Joining an MLM (Multi-Level Marketing) is a Bad Idea: The Real Cost of Losing Money and all your friends and family. 

You’re looking for a side hustle to make a few extra bucks. Suddenly you get a DM from a woman you went to high school with. You weren’t really friends but friendly enough. It starts our “Hey girl, how are you? You look great.” And then the sales pitch. “Have you ever thought about being your own boss? Running your own business with 6 figure potential?” 

Today, we're cutting through the hype surrounding multi-level marketing (MLM) schemes. Despite alluring promises of wealth and independence, the reality is most MLM participants lose money not, make money. We will learn why joining an MLM is almost always a poor decision, detail the pitfalls that lead to significant losses, and expose a few notorious MLMs to avoid. Who they target for recruitment. How they use cult tactics. 2 MLM’s that aren’t bad or are they? 

First what is an MLM. MLM stands for Multi-Level Marketing. It’s a business model where you earn money not by selling just the products, but also by recruiting others to join the MLM. Those recruits then sell the products and recruit more people, and you earn a commission from their sales and recruits.  

The difference between an MLM and a pyramid scheme is in a pyramid scheme, your income is based on recruitment. You don’t recruit people, you don’t make money. In an MLM, you recruit people but you also have inventory to sell. Those people you recruit are called your downline.  

Theoretically, you can make money by building a large network. However, according to a 2024 Forbes article, 99.6% of those who join MLM’s lose money. 99.6%! We’ll get into that a little more in a bit. 

Is joining an MLM a good idea. Let’s go over all the reasons why it isn’t. 

1. High initial costs. Most MLM’s require you to buy a starter kit or inventory to ger started. These costs add up quickly. If you don’t make enough sales, you’re left with unsold inventory. 
2. Income disparity. In MLMs, the income is heavily skewed. A small percentage of people at the top of the pyramid make significant money, while the rest of participants earn very little or lose money. According to Forbes, over 99.6% of MLM participants lose money. 
3. Recruitment. The focus in MLMs is often more on recruiting new members, the downline, than on selling products. This means you’re constantly pressured to find new recruits, which can strain your personal and professional relationships. It will strain those relationships. Once your friends and family start referring to your new side hustle as a cult, you’re in deep and need wake up. 
4. Questionable products. Many MLM’s sell products that are overpriced or make some dubious claims. The business model relies on continuous recruitment not product sales. 

Let’s talk about some of the really bad MLM’s out there. There are so many that pop up all the time.  

Herbal life. Their business practices were investigated by the FTC. The company settled over claims that it deceived its participants about potential earnings. 

Amway. This is an OG of MLM’s. They have been accused of being a pyramid scheme. Former participants what reporting losing money and facing heavy recruitment pressure. Former Director of education under Trump is an heir of Amway. That explained a lot. 

I have friends who were dumped by the husband’s oldest friend and his wife because of Amway. He and wife weren’t part of the Amway cult, so they could no longer hang out because they weren’t “in-network”. Imagine losing your oldest friend to an MLM cult. 

LuLaRoe. Netflix had a good documentary on it. One of the main claims were participants were misled about the profitability of selling the company’s products. 

How do MLM’s find their victims and the false promises they make. 

1. Social media. You get the DM from someone you may have known in the past. Keep in mind, it you’re next on the DM list, they’ve already burned through their friends and family. You’ll be asked if you want to be a boss babe running your own business with unlimited potential. FYI – you’re not running your own business. 
2. Network events. You get invited to a free seminar or webinar that promises financial success and lifestyle upgrades. 

False promises of wealth. They make grandiose claims about earning potential, promising financial freedom and luxury lifestyles. The reality is that these promises rarely materialize for most participants. 

Pressure Tactics. Once they’ve got you interested, MLM recruiters use high-pressure tactics to get you to join quickly. They might emphasize that the opportunity is ‘limited’ or that you need to act fast to achieve success. 

Who do MLM’s target. 

Targets of MLM recruitment are women, minorities, immigrants, military and stay at home wives and college students. Chances are these groups have big social circles they can tap into.  

Cult 

They use cult tactics to convince you. Like all cults they employee thought control, magical thinking, self-blame and pick people with very little critical thinking skills. You are actually trained to avoid people who question whether or not it’s a viable business, like a cult. The MLM tris to isolate you from people who question your belief system, like a cult. If you fail at making money and getting a downline, they tell you how you’ve failed. They discourage you from googling the MLM. They tell you that the stories are from losers who didn’t make money because they were lazy and didn’t hustle. The negative articles online are fake and the news media lies. Cult. Cult. Cult.  

Avon and Pampered Chef. Are they bad MLM’s. From what I’ve seen, no not really. They don’t make the exaggerated claims of making thousands of dollars a month. I have heard that Avon has started pushing the downline. I hope that’s not true. They have decent products.  

Pampered chef. My sister had a pampered chef party like 25, if not more years ago. I still have some of the kitchen products. They’re quality products.  

There is nothing wrong with direct sales to consumers. There are some good products out there. The issue is when focus is on recruiting others. When the focus is on recruitment and not the product, run. It’s a pyramid scheme and a cult.